Pidilite's Quarter: Volume Up 10.7%, Sales Up 21.7%, EBITDA Up 0.5%

Pidilite Industries sold roughly a tenth more in volume in July–September 2026, and price and mix added about a tenth more (our arithmetic), so standalone net sales rose 21.7%. Standalone EBITDA rose 0.5%, from ₹807 crore to ₹811 crore, because material cost rose 40.7%. The filings let you see that demand held. They also let you see, by our arithmetic, that the price rise recovered only about four-fifths of the extra material cost in the quarter, after recovering far more than all of it in the one before.

MoatSCORE: 5.14 (read live on the Moat Screener on 29 Oct 2026; first-pass, provisional). Our first-pass note on the company is on its moat page.

The idea in one sentence

Pricing power tells you a brand can raise prices without losing its customers; it does not tell you the price will rise as fast as the cost, so a margin can fall in a quarter even when the pricing power is real.

The fact that breaks the assumption

Net sales were ₹3,982 crore against ₹3,272 crore a year earlier, up 21.7%, "with Underlying Volume Growth (UVG) of 10.7%" ([B]; the same figures are on [C], slide 8). Both segments grew volume: Consumer and Bazaar 11.1%, Business to Business 9.2% ([B]).

EBITDA was ₹811 crore against ₹807 crore, up 0.5%, and the margin fell to 20.4% from 24.7% ([B], [C]). Standalone profit after tax rose 10.4% to ₹647 crore, and consolidated profit after tax rose 7.1% to ₹626 crore ([B]). Both segments' EBIT margins fell: Consumer and Bazaar to 26.3% from 31.0%, and Business to Business to 14.1% from 17.7% ([B]).

More volume, higher prices, and the same EBITDA in rupees as a year ago.

One concrete thing, followed: the material cost line

Slide 22 of the earnings presentation gives the standalone cost lines in ₹ crore ([C]):

The material cost line can be rebuilt from the results: cost of materials consumed, plus purchases of stock-in-trade, plus changes in inventories, gives ₹2,105.90 crore this quarter and ₹1,496.68 crore a year ago ([A], standalone results; our arithmetic). It matches the deck.

As a share of net sales (our arithmetic), material cost went to 52.9% from 45.8%, up 7.1 points. A&SP fell to 3.1% from 4.3%, staff costs to 11.3% from 12.7%, and other expenses to 12.7% from 13.1%. Those three lines gave back about 3.0 points between them. Net sales less material cost, a gross margin on the company's own Q1 definition (the Q1 figure of 52.5% reproduces this way), was 47.1% against 54.3% a year ago (our arithmetic).

The mechanism: price took about a tenth, but cost took about a quarter, per unit of volume

The filings give two growth rates that let you separate price from volume, roughly. Net sales grew 21.7% and UVG was 10.7%, so the rest, which is price and mix together, was about 9.9% (our arithmetic: 1.217 divided by 1.107). The filings do not define UVG or split price from mix, so treat this as a residual, not a price statement.

Now the cost side. Material cost grew 40.7% while volume grew 10.7%, so material cost per unit of volume rose about 27% (our arithmetic, and again rough, since it includes mix, traded goods and inventory movement). One quarter earlier the same arithmetic gives very different numbers, using [D] and [E]:

(All rows below the company's reported growth rates are our arithmetic. The rupee rows take last year's quarter, grow it by UVG, and treat the remainder of the actual figure as price, mix and cost inflation.)

The price-and-mix effect held at about 10% in both quarters. The cost effect more than doubled. In Q1 the price covered the extra material cost with room to spare and EBITDA margin rose to 26.4% from 25.6% ([D]). In Q2 it covered about four-fifths, and the margin fell 4.3 points.

Management had said in August that some of Q1's advantage would reverse in Q2. On the Q1 call, Sudhanshu Vats, Managing Director, listed three reasons Q1 was strong: pricing "based on replacement margins" ([F], page 10), "some amount of carry over inventory as well", and "some moderation in scheme". He then said: "And I think some of it will correct in the second quarter." ([F], page 11). In the same call the Chief Financial Officer reported "VAM consumption in the quarter was at $1,370 as compared to last year $924" ([F], page 2). VAM is a raw material the company names; the Q2 filings do not give its price.

That is the mechanism, in our reading: pricing power let the company pass through a cost rise without losing volume, but the pass-through is set on replacement margins and phased through the quarter ([F], page 10), while the cost line shows what was consumed. When low-cost inventory runs out and prices have already been set, the cost line catches up and the price line does not. For the half-year, the company's own commentary says: "Timely pricing actions and disciplined cost management, enabled the Company to absorb the impact of input cost inflation." ([C], slide 8). Over six months our arithmetic agrees, at about 1.1x, with the first-half margin at 23.5%. Over the single quarter it does not.

The Managing Director's Q2 statement is shorter. Vats says: "Despite very high material inflation, amidst unprecedented volatility and uncertainty, we delivered steady margins in H1 FY27." ([B]). The period he names is H1, not the quarter.

What also moved the line

Two other things sit under the 20.4%.

Advertising was cut. A&SP fell ₹18 crore, 12.6%, in Q2, after rising 36.6% in Q1 (₹112 crore to ₹153 crore, [E], slide 18). With A&SP flat at ₹141 crore, the Q2 EBITDA margin would have been about 19.9% instead of 20.4% (our arithmetic, assuming sales unchanged). The company says it will "continue to invest behind our brands, innovation and distribution" ([B]). The deck does not say why A&SP fell.

Profit after tax grew faster than EBITDA because of other income. Standalone profit before exceptional items and tax rose ₹62.5 crore, to ₹842.24 crore from ₹779.75 crore ([A]). Other income rose ₹61.2 crore, to ₹129.69 crore from ₹68.51 crore ([A]). So almost all of the profit growth came from other income, not from operations (our arithmetic). The deck's EBITDA is "before non-operating income" ([C], slide 9). For the half-year, the cash flow statement lists dividend income of ₹69.80 crore against ₹19.14 crore, and gains on financial assets at fair value through profit and loss of ₹128.84 crore against ₹122.33 crore ([A]). The quarterly split is not given.

Where this breaks

• The price estimate is a residual. UVG is the company's own term, not defined in the filings read. A price-and-mix figure of about 9.9% includes whatever changed in product mix, export mix and trade schemes. On the Q1 call Vats said Consumer and Bazaar prices ranged "from, let's say, 2% to about 12%, to be fair" ([F], page 13) and that "we could end up giving some rebate" ([F], page 5) if raw materials fell. Net realisation may be lower than the list price rises, and the Q2 filings do not say by how much.
• One quarter is not a trend, and a quarter is not a year. The first half's margin of 23.5% sits inside the 20% to 24% range Vats referred to: "our range is known to you, which is 20% to 24%" ([F], page 11). Q2's 20.4% is near the bottom of that range, and Vats said on the same call "quarter 1 tends to be the biggest quarter" ([F], page 18). Read the two together, not the second alone.
• The strongest argument against our thesis: the margin fall may say nothing about the moat. If cost timing explains Q2 and Q1 flattered it, then half-year margin is the right figure, and on it the company absorbed inflation as it says. On that reading the filings support pricing power, and our "four-fifths" is an artefact of when cost was recognised.
• The other strong argument: a cut in A&SP to protect margin is a use of the moat, not a proof of it. If brand spend is what keeps the price premium, the quarter borrowed from it. One quarter cannot show whether it matters.
• Cash and working capital. Half-year operating cash flow was ₹1,058.82 crore against ₹1,333.85 crore, down 20.6% (our arithmetic), with trade receivables absorbing ₹640.91 crore against ₹316.17 crore and inventories ₹264.48 crore against a ₹154.64 crore release ([A], cash flow statement). In our reading, higher prices need more working capital; the filings do not say why receivables rose. The filings give no 30 September 2025 balance sheet to compare, so seasonality cannot be separated.
• Management has not yet explained Q2. The earnings call is dated 29 October 2026 ([B]) and its transcript was not filed when we checked. It may supply the VAM level, the price rises and the A&SP reason. This draft does not use it.

Why it costs the reader something

A headline that says "revenue up 21.7%, EBITDA up 0.5%" invites two opposite mistakes. One says the moat has failed because the margin fell 4.3 points. The other says the moat is fine because profit after tax rose 10.4%. The filings show a third thing. Volume grew in both segments, and price-and-mix has held near 10% for two quarters in a row, which in our reading is what price discretion looks like. And almost all of the growth in profit before tax came from other income (our arithmetic).

To judge a pricing-power claim, the number to track is not the EBITDA margin in one quarter but the rupee recovery: how much of the extra material cost the price rise covers, and over how long. That is a cost-timing question the company can answer on its call and the filings do not.

The auditors' limited review reports do not bear on this. The standalone report says "nothing has come to our attention that causes us to believe" the statement is misstated, and note 2 calls it an "unmodified opinion" ([A]). The consolidated report is also unmodified, with two "not modified" matters on other auditors' work and on thirty subsidiaries whose interim information was not reviewed, which management told the auditors is not material to the group ([A]).

What to watch

1. The Q2 call (29 October 2026): the VAM level, the price rises taken, and the reason A&SP fell.
2. Q3 net sales growth against UVG. If price-and-mix stays near 10% while UVG holds, pricing power is intact. If price-and-mix falls, rebates, price cuts or a mix shift could be the reason (our reading); the filings would need to say which.
3. Whether material cost per unit of volume eases, measured against the 20% to 24% EBITDA margin range Vats gave on the Q1 call ([F], page 11).
4. Other income. Q2's ₹129.69 crore is not an operating number.

The concrete thing, again

Slide 22 shows one line that rose 40.7% against sales up 21.7%. In Q1 the same line rose 24.5% and the company's margin went up. The price rise is the same size in both quarters. What changed is the cost it was set against. The filings support "volume held, price held". They do not yet show how much of a 27% rise per unit of volume the company can recover, or how fast.

Sources

• [A] Pidilite Industries, unaudited standalone and consolidated results with limited review reports, 28 Oct 2026 (NSE)
• [B] Pidilite Industries, press release on Q2 and H1 FY27 (NSE)
• [C] Pidilite Industries, Q2 FY27 earnings presentation (NSE)
• [D] Pidilite Industries, press release on Q1 FY27, 4 Aug 2026 (NSE)
• [E] Pidilite Industries, Q1 FY27 earnings presentation, 4 Aug 2026 (NSE)
• [F] Pidilite Industries, Q1 FY27 earnings call transcript, call held 5 Aug 2026 (NSE)
• [G] Pidilite Industries Moat Analysis and [H] Moat Screener, with How MoatSCORE works

Educational research, not investment advice. Every figure above is drawn from Pidilite Industries' own filings, read from the primary documents on 29 October 2026; derived figures are our arithmetic, labelled as such. MoatSCORE: 5.14 (read live on the Moat Screener on 29 Oct 2026; first-pass, provisional). No buy/sell recommendations, no price targets, no share prices. Moat & Margin is not a SEBI-registered Research Analyst or Investment Adviser.